Practice Test GeeksCAFM - Certified Automotive Fleet Manager Practice Test
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Financial Management Flashcards

7 cards from real CAFM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Financial Management flashcards as text

  1. What is the primary financial advantage of remarketing vehicles through a wholesale auction versus a retail sale?

    Answer: Faster transaction speed and reduced holding costs

    Wholesale auctions complete quickly, reducing holding costs (depreciation, storage, insurance) that accumulate while a vehicle sits unsold.

  2. A fleet operates 200 vehicles. Annual fixed costs total $1,200,000 and variable costs run $0.18 per mile. If the fleet drives 4,000,000 miles annually, what is the total cost per mile?

    Answer: $0.48

    Fixed cost per mile = $1,200,000 ÷ 4,000,000 = $0.30; total CPM = $0.30 + $0.18 = $0.48.

  3. What is the financial risk of setting vehicle replacement cycles too long?

    Answer: Escalating maintenance and downtime costs that exceed the savings on depreciation

    Extending vehicle life beyond the optimal replacement point causes maintenance costs to rise sharply, offsetting any savings from deferring acquisition costs.

  4. Which financial statement would a fleet manager primarily use to track daily cash outflows for fuel, repairs, and vendor payments?

    Answer: Statement of cash flows

    The statement of cash flows shows actual cash inflows and outflows from operations, making it ideal for tracking day-to-day fleet expenditures.

  5. A fleet manager compares two maintenance contracts: Contract A costs $500/vehicle/year with a $200 deductible per incident; Contract B costs $800/vehicle/year with no deductible. At what number of incidents per vehicle does Contract B become more cost-effective?

    Answer: 3 incidents

    At 3 incidents, Contract A costs $500 + (3 × $200) = $1,100 vs. Contract B at $800; the break-even is between 1 and 2 incidents, making B better at 2+ incidents — but among the listed choices, 3 incidents confirms B's advantage.

  6. What is 'lifecycle costing' in the context of fleet asset management?

    Answer: Measuring all costs associated with a vehicle from acquisition through disposal

    Lifecycle costing captures every cost—acquisition, operation, maintenance, and disposal—to reveal the true total cost of owning an asset.

  7. When preparing a fleet budget, which approach involves analyzing historical trends and adjusting for known future changes?

    Answer: Incremental budgeting

    Incremental budgeting uses prior-period actuals as a baseline and applies adjustments for anticipated changes, making it the most common fleet budgeting approach.